Friday tips round up: Weir Group, Pennon

25th Nov 2011 07:51

The Times's Tempus column looks at Weir Group, which has taken a significant bet on the gas extraction method known as hydraulic fracturing with its $675mn takeover of Texas firm Seaboard.The purchase puts Weir in the business of building the type of well heads used in "fracking" - a process which is being tried around the globe, albeit with significant environmental concerns.The risks of the strategy are manifold. The price paid for Seaboard is three times sales and 12 times 2011 earnings. Secondly, fracking might run into significant regulatory and poplar resistance as its full environmental impacts become known.However, with the boom in fracking for gas likely to start a similar drive to frack for oil, Tempus believes Weir Group is a fracking buy.Tempus's other tip is Pennon, which used to simply be called South West Water. However, it diversified into waste energy and management through the creation of Viridor.Viridor, Tempus points out, is a tasty little business which at the half way stage this year produced pre-tax profits 7% up on the previous year, with four large waste energy plants to come on line in the next five years its earning could double.Those numbers, combined with South West Water's own cost cutting success make Pennon a buy.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.